Many traders were expecting more out of A-Power Energy (NASDAQ:APWR) this quarter and once again they were disappointed as the company missed analyst estimates by a decent margin. APWR has made a habit of missing estimates and selling off in recent reports, but I have to admit, I was kind of hoping that they would miss this quarter so I could add shares at a lower price. Looks like I may get my opportunity.
The company reported a non GAAP EPS of .28 per share on revenues of $96.7 million, vs the Wall St estimates of .31 per share and $113.4 million respectively. Not a huge miss, but enough to send shares down about 8% in premarket trading. If their is a silver lining in the report, it’s that the company continues to recover from the dismal Q1 quarter and reported record revenues in the quarter. This company is a 2010 story and I expect quarter over quarter growth to return in a significant way.
Looking ahead, the company is reaffirming its full year 2009 guidance of $320 million in revenues and $32 million in profit.
Here’s a comment from the CEO:
“We continue to make key strategic advancement in our wind turbine business, as we see the Chinese wind energy market is moving towards bigger turbines with proven track records. Our partnerships with GE and Fuhrlander demonstrated their strong endorsement on A-Power’s engineering capability and production capacity, which also started to gain traction from wind farms in both China and other geographic markets. On the DG side of our business, together with government backed Shenyang Power Group, we are well positioned to win high-profile contracts for DG systems and micro power grids both in China and overseas.”
The reason I’m looking to add shares into the selling this morning (Dec. 3rd) is based in part on the future prospects of the company but more so due to the increasingly bullish technical action. I initiated a first position on 11/17 when the stock broke out of its base above 12.39 and regretted not adding a larger position as the stock soared more than 50% in a few weeks on heavy volume. The stock has pulled back off the highs heading into earnings as traders booked profits and the selling this morning will take the stock below the first level of new support at 14.68. The next level of support is around the 20 day moving average at 13.50.
My strategy will be to let the stock trade for 30 min to an hour to see where it stabilizes, then look for an entry point on a break out from intraday consolidation. With the company sure to benefit big from wind energy opportunities in China and now the US, along with its push into biofuels, LNG and solar, this may be the last rest stop before another ride higher.
Disclosure: Author is long APWR.